Page 8 - FSUOGM Week 05 2020
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FSUOGM PIPELINES & TRANSPORT FSUOGM
Kazakhstan to resume oil flows to China within days
KAZAKHSTAN
The contamination comes after Kazakhstan last year pledged to expand oil supplies to China.
KAZAKHSTAN intends to resume oil ship- ments to China with days, Kazakh Energy Min- ister Nurlan Nogayev told reporters on February 4, a er halting them last month because oil was found to be contaminated with chemicals.
Exports to China were suspended on Janu- ary 22 owing to the oil’s high content of organic chlorides – chemicals used to boost recovery at oil elds that can cause damage to re ning equip- ment if not removed. e tainted supplies had come from CNPC-Aktobemunaigas, a Chinese venture working in the western Aktobe region. CNPC-Aktobemunaigas was cut o from the national pipeline grid earlier in January a er the contamination was discovered.
Nogayev, speaking a er a government meet- ing, did not disclose how quickly Chinese ship- ments would ramp up to their usual level. Nor did he say how much oil had been contaminated. However, national pipeline operator KazTran- sOil (KTO) told Reuters on January 30 that 150,000 tonnes (1.1mn barrels) of oil had been spoiled.
Kazakhstan ships oil to China via the Atasu- Alashankou and Kenkiyak-Kunkoil pipelines, which together are able to carry up to 400,000
barrels per day of supplies. Shipments have seen a sharp decline in recent years, from almost 240,000 bpd in 2012 to less than 26,000 bpd in 2018.
e disruption comes a er the Kazakh gov- ernment pledged last summer to reverse this trend, expanding supplies to China to 120,000- 140,000 bpd in order to reduce overreliance on European oil markets.
Kazakhstan also transits Russian oil to China, but according to the authorities, these deliveries are una ected by the incident.
Russia su ered its own, more serious “dirty oil” crisis last year, when it was found that mil- lions of barrels of oil in the Druzhba pipeline sys- tem had been polluted with chlorides. Moscow is still processing the billions of dollars in claims led by clients relating to spoiled cargoes, the loss of earnings due to disruptions and damage sus- tained at re neries (see story below).
Neither CNPC-Aktobemunaigas nor its parent company CNPC have commented on the oil con- tamination. e company, taken over by CNPC between 1997 and 2003, operates several large fields, including the Kenkiyak and Zhanazhol, producing around 80,000 bpd of oil.
Transeft could face double the claims over dirty oil crisis
RUSSIA
Russia’s European customers are demanding more than RUB1 trillion in compensation for receiving spoiled oil.
RUSSIAN state oil pipeline operator Trans- ne could face more than double the expected amount of compensation claims for supplies of contaminated oil, or $1bn, Reuters reported on January 30 citing unnamed industry sources.
Millions of barrels of Russian oil contami- nated with organic chlorides were exported last spring via Russia’s Europe-bound Druzhba pipe- line. Customers have led claims for receiving spoiled oil and facing disruptions to business as a result of the crisis.
The burden of compensation claims have clouded the outlook of Tatne ’s dividend policy. Transne previously pledged to compensate up to $15 per barrel of contaminated oil, or a total of RUB23bn ($371mn). However, report- edly most of the European buyers of oil claim
$30-40 per barrel compensation.
The buyers of the oil include such majors
as Eni, Royal Dutch Shell, Glencore, Trafig- ura, PKN Orlen and British Petroleum. The only companies that have so far settled with Transneft at the $15 per barrel compensation level are Kazakh oil buyers and domestic oil major Lukoil (reselling to Hungarian MOL).
Transne reported net pro t decline of 30% quarter on quarter to $607mn under IFRS in 3Q19, while revenues gained 5% q/q and Ebitda 10%.
Despite the decline, its net pro t still exceeded consensus expectations by 14%. BCS Global Markets believes that the market has overesti- mated the amount of compensatory reserves due to the Druzhba contamination issue.
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w w w. N E W S B A S E . c o m Week 05 05•February•2020
